THE COMMISSIONER OF THE NEW ZEALAND POLICE v TOWNSHEND & ANOR [2017] NZHC 938

THE COMMISSIONER OF THE NEW ZEALAND POLICE v TOWNSHEND & ANOR [2017] NZHC 938 [10 May 2017]IN THE HIGH COURT OF NEW ZEALANDCHRISTCHURCH REGISTRYCIV-2017-409-292[2017] NZHC 938IN THE MATTER OF an application pursuant to ss 22, 24 and 25of the Criminal Proceeds (Recovery) Act2009BETWEEN THE COMMISSIONER OF THENEW ZEALAND POLICEApplicantAND JOSHUA FRANCIS TOWNSHENDFirst RespondentPUBLIC DEFENCE SERVICE,CHRISTCHURCHSecond RespondentHearing: 10 May 2017Counsel: C Lange and K South for the ApplicantJudgment: 10 May 2017JUDGMENT OF MANDER J[1] This is a without notice application for a restraining order under the Criminal Proceeds (Recovery) Act 2009 (the Act) in respect of property owned by the respondent, Joshua Townshend. The details of that property are as follows:(a) $10,000 in cash, being exhibit FL09, seized from 5 Flock Lane on 15 April 2015, and which is currently in the possession of the New Zealand Police;(b) The sum of $47,000, currently in the form of a bank cheque in the sum of $47,000 held by the Public Defence Service at Christchurch, and the funds the bank cheque represents; and(c) A grey MV Augusta Brutale motorcycle, registration B7JLZ, valued at approximately $15,000, currently registered in the name of Joshua Francis Townshend.[2] I have read the affidavit of Detective Duncan Bull who is an officer attached to the Southern Asset Recovery Unit of the Christchurch Police. He deposes that Mr Townshend has pleaded guilty to 129 charges filed under the Medicines Act 1981 for advertising and selling non-approved medicines and being in possession of prescription medicines without reasonable excuse. The details of that offending are set out in Detective Bull's affidavit.[3] In short, Mr Townshend operated an unlawful steroid supply business, selling illegal steroids and other image and performance enhancing drugs to hundreds of customers over a period of many months between 2014 and 2015. The investigation undertaken by the Ministry of Health revealed that Mr Townshend recorded sales of around $350,000 over one year.[4] Ten thousand dollars in cash was seized from Mr Townshend's address at 5 Flock Lane during the execution of a search warrant in April 2015. The cash waslocated in a safe in Mr Townshend's bedroom, along with one kilogram ofClenbuterol powder and prescription medicines which he did not have a reasonable excuse to possess. The police also located paraphernalia associated with medicines, courier labels and other evidence of illicit trade in prescription medicines.[5] Detective Bull deposes that he believes the $10,000 cash is tainted property acquired as a result of significant criminal activity, being offending engaged in by Mr Townshend. He notes there is no provision under the Medicines Act or the Sentencing Act that addresses the forfeiture of moneys obtained from the sale of medicines.[6] Further inquiries made by the Commissioner has made him aware that Mr Townshend is the registered owner of a motorcycle, registration B7JLZ, valued at approximately $15,000. The source of the funds used to purchase the motorcycle is yet unknown, however, it is believed that Mr Townshend has unlawfully benefittedfrom significant criminal as a result of his offending against the Medicines Act to the extent of approximately $350,000, as outlined in the uncontested summary of facts upon which he will be sentenced.[7] Mr Townshend is for sentence in the Christchurch District Court thisafternoon at 2.15 pm. Sentencing submissions have been filed on Mr Townshend'sbehalf by the Public Defence Service. Those submissions reveal that Mr Townshend has retained control of a $47,000 profit generated as a result of his significant criminal activity. He has provided his counsel with a bank cheque payable to the Ministry of Health for $47,000. Accompanying the sentencing submissions is a letter written by Mr Townshend which refers to him having $47,000 left from the money he obtained from his offending, which he declares he wishes to surrender soas to "leave this part of my life behind". Mr Townshend states that he wants nothing to do "with the profits" of his actions which he deeply regrets.[8] The Commissioner has acknowledged that Mr Townshend intends to makewhat his counsel has described as "a reparation payment to the Ministry of Health",but does not accept that the $47,000 cheque can properly be characterised as reparation. Rather, as acknowledged by Mr Townshend himself, the funds form part of the profit he generated from his offending. I understand this will be the stance taken by the Crown at sentencing.[9] I am satisfied there are reasonable grounds to believe that Mr Townshend has unlawfully benefitted from significant criminal activity, namely from selling new medicines in contravention of the Medicines Act, advertising new medicines, and possession of prescription medicines without reasonable excuse from which property, proceeds or benefits of a value of $30,000 or more have been acquired or derived. Further, I am satisfied there are reasonable grounds to believe the items of property the subject of the application are tainted property.[10] I also accept there is a risk that the proposed restrained property may be disposed of, altered, or concealed, if notice is given to Mr Townshend. Because there is no provision under the Medicines Act or the Sentencing Act to address forfeiture of moneys obtained from the sale of medicines, in the absence of arestraining order Mr Townshend may request the police return the $10,000 to him on the basis that presently the police have no lawful authority to retain the funds. In relation to the motorcycle there is a reasonable risk that unless that item is restrained Mr Townshend may take immediate steps to dispose or conceal the motorcycle.[11] The position in respect of the $47,000 bank cheque is less clear, and I have some residual concerns regarding the relationship between the Commissioner'sapplication and the imminent sentencing of Mr Townshend which is to take place before the District Court this afternoon.[12] The Commissioner's position is outlined in Detective Bull's affidavit. Heaccurately observes that Mr Townshend will rely upon the $47,000 as a type of reparation payment to obtain additional credit as a mitigating factor which may influence the District Court to impose a sentence of home detention, as opposed to one of imprisonment as formally indicated at a sentencing indication hearing on 9 February 2017. The Commissioner's concern is that if Mr Townshend is made aware of the Crown's position disputing that reparation can properly be made in thecircumstances of this case, or that the District Court may not have jurisdiction to receive the payment, there is a very high risk that Mr Townshend will instruct his counsel from the Public Defence Service to return the bank cheque to him.[13] Counsel is likely to be under an obligation to follow Mr Townshend'sinstructions to return the cheque and in the absence of a restraining order preventing that from occurring the funds may be disposed of or concealed. The Commissioner notes that as he does not know which bank issued the bank cheque, he would have little information to act upon to trace the funds. The Commissioner is concerned that should Mr Townshend appreciate the $47,000 was at risk of being forfeited under the Act, as opposed to being treated as reparation, he may cancel the bank cheque and dispose or conceal the funds. Earlier inquiries undertaken by the Commissioner in 2014 into Mr Townshend's financial position did not result in the identification of assets or funds of this size. The Commissioner therefore believes Mr Townshend has the means to conceal the profits of his offending.[14] I accept there are reasonable grounds to believe that should the $47,000 not be able to be utilised for the purposes intended at sentencing, Mr Townshend may take actions to dispose or conceal those funds, and it is appropriate that a restraining order be issued without notice to Mr Townshend.[15] However, the granting of an order in respect of the $47,000 cheque must not be allowed to interfere with the sentencing process before the District Court. Because of the circumstances by which knowledge of the $47,000 became knownand the timing of the Commissioner's application, the restraint of those funds should not be allowed to interfere with the jurisdiction of the sentencing Court.[16] It will be a matter for the sentencing Judge as to the approach to be taken to Mr Townshend's offering of the $47,000 cheque made out to the Ministry of Health.The order I make restraining the sum of $47,000, currently in the form of a bank cheque, is expressly subject to any decision by the sentencing Judge regarding the status of the bank cheque and the use to which he or she considers the funds can properly be put, if any, in sentencing Mr Townshend.[17] I make the following orders:(a) $10,000 in cash, being exhibit FL09, seized from 5 Flock Lane on 15 April 2015, and which is currently in the possession of New Zealand Police, is not to be disposed of, or dealt with, other than as is providedfor in the restraining order, and is to be in the Official Assignee'scustody and control.(b) A grey MV Augusta Brutale motorcycle, registration B7JLZ, valued at approximately $15,000, and currently registered in the name of Joshua Francis Townshend, is not to be disposed of, or dealt with, other than as is provided for in the restraining order, and is to be in the OfficialAssignee's custody and control.(c) Subject to any order, if any, made by the sentencing Judge regarding the $47,000 bank cheque as part of the sentence imposed onMr Townshend for offending against the Medicines Act, the sum of $47,000, currently in the form of a bank cheque held by the Public Defence Service at Christchurch, and the funds the bank cheque represents, is not to be disposed of, or dealt with, other than as provided for in the restraining order, and is to be in the Official Assignee's custody and control.Solicitors:Raymond Donnelly & Co, ChristchurchPublic Defence Service, Christchurch